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November 4, 2015 at 12:17 pm
Thank you so much, especially for your fast response!
I think I understand now…the subsidiary sold to the parent, but as a group, the asset is still within the group and not to a 3rd party? so it would still be depreciated as a non current asset for consolidation as a group?
That’s why there was also a line item as “unrealized profit of 5M on non current asset held for sale” in the subsidiary’s net assets at consolidation (for working 2)?
Is it also possible that it is because, the subsidiary was acquired 2 years ago that’s why it was still full depreciated for the year?
November 4, 2015 at 12:35 pm
That would certainly explain why it was a full year but I still think the reason for the depreciation is because it’s not now being treated as AHFS
November 3, 2015 at 6:51 pm
I love your style of teaching!!!
I have a question here that is seriously confusing me,according to IFRS 5, non current asset held for sale are not to be depreciated.
This question is a consolidation question so please share your thoughts:
A consolidated statement of financial position is to be prepared as at 31 October 2005 and note 3 of the question relating to asset held for sale says:
Think(an 80% subsidiary) sold plant and equipment to Lateral(the parent) on 12 November 2005.The transaction was completed at an agreed price of $15m after selling costs. The transaction complies with the conditions in IFRS 5 Non-current assets held for sale and discontinued operations for disclosure as assets ‘held for sale’. The plant and equipment had been valued at ‘fair value less costs to sell’ in the individual accounts of Think(the subsidiary). At November 2004, this plant and equipment had a carrying value of 10million and no depreciation on these assets has been charged for the year ended 31 October,2005.
Other Info: in note 2 it states group policy is to depreciated plant and equipment by 20%
and also in the question, the draft financial statement of think as at 31 Oct 2005 shows 15m as a line item for” non-current assets classified as held for sale”.
after solving this question, in the answer: for working 2 of Net assets of subsidiary of THINK, they deducted in its “computation of net asset at consolidation\post acquisition” : depreciation of held for sale assets(20% x 10)= (2)
Why did the depreciate the asset held for sale?
Please share your thoughts, do you have an idea why this was done?
November 3, 2015 at 7:42 pm
It sounds to me like the subsidiary wanted it to be AHFS but was unsuccessful in disposing of it so now it’s moved within the group. The parent has it, transferred at a profit, so let’s get back to pre-profit stage ie $10 million. But that $10 million asset needs to be depreciated by 6/12 x 20% x $10 million
“Why did the depreciate the asset held for sale?” – because it’s no longer classified as such (I presume) in the consolidation
May 3, 2013 at 3:53 pm
Help please, can’t access the lecture, I get message saying ”404 not found”
May 3, 2013 at 4:26 pm
what are you sing to access lectures?
October 26, 2013 at 8:25 pm
What “sing to access lectures?” LoL
November 27, 2014 at 5:59 pm
I think he meant using.
November 27, 2014 at 6:00 pm
After posting I realized that the reply was over an year old. My mistake.
February 8, 2013 at 2:10 pm
lol @ the beginning of lecture lol
June 25, 2012 at 4:25 pm
I m able to see nd listen some of lecture ifrs 5 nd chapter cant see or either hear
@syedwaqar, chapter 8
June 25, 2012 at 6:07 pm
@syedwaqar, try another browser
banke ade says
June 13, 2012 at 3:50 pm
I really enjoyed the lectures. Mike is an excellent communicator who sure knows his stuff. Thanks a lot OT
May 7, 2011 at 11:04 am
the first part of lecture made giggle so much that i felt the chair beneath me vibrate =D!! This very was extremely interesting!!
Thank you Opentuition =D!!
October 30, 2010 at 8:47 pm
if all ACCA students get the open tuition accounts lords.then the failure rate will reduce significantly.Thanks for help me knowing account
September 24, 2010 at 10:49 am
Agree! He is excellent!
September 24, 2010 at 7:43 am
Excellent lecturer, I would recommend it for all the ACCA students
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